Winning the eCommerce Game with AI | Alan Gormley

Alan: So what happens in most retailers is when they apply AI, the people who are doing it don't actually understand retail. So what they do is they do people who like this also like this.

That drives the average customer to the best seller products. So your, your catalog is gradually shrinking and shrinking and shrinking. Yeah. And you think you're doing really well because people are claiming sales, but actually you're killing your business. You're killing your margins. You're creating what we call the long tail problem.

​

Matt: Welcome to the e-Commerce podcast with me your host, Matt Edmundson. Now, the E-Commerce podcast is a show all about helping you deliver e-commerce. Wow. And to help us do just that today, I'm chatting with Alan Gormley from Shop Box AI about winning the e-commerce game with ai. Yes, we are getting into all things ai, it's such a hot topic.

But before Alan and I get into that conversation, let me share with you a previous podcast. Pick that I think you'll enjoy. And to do that, I'm gonna go to our website, ecommercepodcast.net. I am gonna hit on all episodes and you can do exactly the same thing cuz every episode is there and you can type into the search bar.

I'm doing it now. You can hear me typing things like. AI, for example, and you can see what topics we've got on the website. Um, and it'll bring up a whole bunch of stuff for you. Or you can type in things like, I don't know, email marketing. Uh, and again, it will just bring up all of those topics for you and you can find your favorite podcast episodes.

Our search functionality is pretty good, so do check it out. So my podcast pick is more of a podcast tip today that's user search functionality on the website. Oh yes. Now, If you are subscribed to our newsletter, you will of course be getting today's show notes and transcript. Direct your inbox totally for free cuz that's what happens.

Uh, but if you're not subscribed to the newsletter, whilst you're checking out the search functionality on the site, why not sign up to the email newsletter? And every week we email you the links and the notes from the show from each amazing guest. That we have on, so do check that out at ecommercepodcast.net.

Now, are you struggling to grow your e-commerce business? Do you feel like you are constantly spinning the wheels trying to figure out what to focus on next? Let me tell you, I know exactly how it feels and how frustrating it can be. I was on a call this morning looking at one of our e-commerce websites and there's still things on there that aren't right, that aren't perfect, and it's like, where do I start?

Where do I begin? You've gotta get it all right. And that's why we love e-commerce cohort. Yes. E-commerce cohort is today's show sponsor. It helps e-commerce businesses like yours and like mine to deliver exceptional customer experiences that drive results. Ah, yes. It's such a great tool. Honestly. It's like a, it's a, it's um, it's a membership group.

The best way to describe it is a membership group. It's like a mastermind. You come, you join e-commerce cohort. We look at some expert workshops, we figure out what it means for our own e-commerce business. And in that way we never miss one of the key areas of e-commerce cuz it's, we're constantly going over the stuff, which is why today on the call, It was great because we knew some of the stuff that came out through cohort.

So if you would like to find out more, why not check out, uh, ecommercecohort.com. There's more information on the website, ecommercecohort.com. If you're running e-commerce, uh, and you wanna just make sure everything's gonna work well do check it out. I can highly recommend it. Now that's the show sponsor.

Let's meet today's guest, Alan Gormley, the mastermind behind Shop Box AI and I love this bio, Alan. I don't know if you wrote this or whether Sadaf wrote this, uh, but it says here behind, uh, or No, with a superhero's Cape made from 25 years of AI and retail wisdom, Alan swooped into the e-commerce arena to level the playing field, his mission to arm David size retailers with Goliath-beating AI tools, opening a world where every Reed Taylor gets a Shop at the big lead.

I don't know, Alan, if that's your bio, like I say, whether Sadaf wrote it, but that has got to be the best bio I've ever read on this podcast.

Alan: So I will say that content is, is mine. Uh, but Sadaf definitely put a cloak on me. I have never used that but, uh, yeah, maybe we'll do that. Maybe that, that, maybe that's the next thing.

Matt: Yeah, yeah, yeah. Do that. Put a cloak on. So if you're listening to the podcast or watching the YouTube video, um, Uh, Sadaf is the show producer, uh, and she just makes all the magic happen behind the scenes, and she does like to tweak guest bios.

Uh, and so I particularly like that one. I like the idea of the, uh, the, the, what was the sentence? The David size retailers to arm David size retailers with Goliath beating. AI tools. And the reason I like it, Alan, is because I have this thing of, I have this phrase, which I use the digital David's taking on the Goliath.

You know, and it's, um, and it is such a great phrase and such a great thing that the little guy can actually take on the big guy if he has the right tools to help him. So, um, explain, just explain what Shop box AI is, um, and how it was, I suppose in some respects. We'll get into how it helps David take on Goliath.

Alan: Yeah, absolutely. Um, I might just give you a bit of background into where we came from. Mm-hmm. Because I think that helps explain it very well at, at, at a very, at a very high level, the point of shop box is that it creates a unique store for each customer that comes onto your website. Right. Okay. So every customer should get their view of your store full stop.

Cuz we got the capability to do it online and for years we haven't done it. Yeah. Um, let me go back to how we got to there. Um, I, I've been in the AI industry since 97 and I've worked Oh, wow. Across Europe. Yeah, yeah, yeah. So I started down in Croydon, um, uh, in insurance actually. But I worked across many, many different sectors, but a huge focus of mine has been on retail.

And one thing that started to get really frustrating for me was we only worked with very large companies. Yeah. And, It got very frustrating because I thought we got huge companies taking massive advantage of this technology and everyone else doesn't even get to play at the party. Mm-hmm. So that was kind of a, a big frustration for me.

But the more I looked at e-commerce and what I wanted to do with my life, which was to level the playing field to a large degree, the more I realized that retail had by far the worst disparity of any industry. So, um, To be really clear, you've got Amazon. Mm-hmm. Right up there at the top 30,000 feet.

Living at large, they reckon about 35% of average of Amazon's revenue comes from what they call hyperpersonalization, right? We're trying to call it slightly different these days, but essentially, AI applied to retail in realtime, right? Proper applied to retail in time. So Amazon are doing it, making 35% of the revenue.

That's according to analyst. Amazon will never tell you themselves. Um, Then you look at the next layer. So who's competing with Amazon? I would contend nobody, literally, nobody is competing at that level. Some of the largest retailers that we've looked at from, you know, the best buys in the US to the John Lewises, to the fanatics, the metros not even really playing in that game.

Yeah. So if you give a really good example, uh, I, there's a few, few websites I've been tracking out for four years, and I go on pretty much every day. To tell them that I want a pair of men's shoes or a camera, whatever it is, just something really simple to see. Will you at some point figure out, I'm a guy who wants shoes.

I'm apparently a woman with hair who wants floral dresses, so you know, it's wrong in all accounts. Um, but you know, it's not, it's a terrible experience for a customer. And then when we looked at the market, we realized that personalization tools weren't helping because what they, what they were, when you talk to them and you go under the covers, What they were really doing was allowing merchandisers to push products they wanted to sell on their customers.

There's very little, actually about customer. Yeah. And it's really, when you start to look at some of these stores, through those eyes, you start, it becomes really, really obvious that what they're recommending to me is what the category manager shouted loudest about on the, yeah. Yeah. So we looked at that and said, okay, so there's, there's, there's two things here.

We gotta change the game for all retailers. We gotta make a system that allows any retailer to get on board. So we're working with people from, you know, 200,000 per year annual revenue where they're just starting out right up to 200 million. And we're talking to people who are about a billion annual revenue right now, um, to come onto the platform.

So the whole point is everybody gets to play with the same technology. Right, and get, take advantage of it. But the other thing, and this is, this is actually more critical for where real return investment comes from for, for customers. The other problem I had with them personalization in, in, in retail is I don't think it's very ambitious.

Okay. So I look at it and I look at people who've been around for 15 years and going, what are you doing that's competing with Amazon? Because if you're not competing with Amazon, or you're not looking at Netflix and TikTok as, as the Talismans that you wanna reach, why are you doing what you're doing?

Mm-hmm. So, to me, unless you're gonna try and compete at Amazon's level, there's no point. you, gotta be better than the best. So the, and, and you know, some people like Amazon, some people hate Amazon, but they're pretty good at what they do. Yeah. Um, they, so we looked at 'em. We realized that over the last 20 years, retailers have allowed themselves not really through any, any fault of their own, but they've gradually been pushed to the end of the shopping journey.

Okay? So they're, retailers are so focused on the cart and on the last step of the transaction that they've missed the entire shopping journey. Okay? And this really. Where I first started thinking about this was about 15 years ago, a CMO said to me, I'm sick of paying Google for my own customers. Yeah. Oh, that's an interesting comment.

That's a very, very interesting comment. Okay, so now this guy, his, his company, their brand is not an English word, so there's no way anybody's typing their brand in for any other reason apart to go from them. Yeah. So, We looked at and went, um, okay. It's fine paying somebody to acquire customers, but it seems a bit much to pay somebody to keep a customer involved all the time.

Yeah. The more I started to go under the covers of this, the more I realized we've, essentially outsourced customer management, to Google, and, and take Google. Like Google to me is, it's like Hoover, it's a word for anybody you pay to bring stuff to your site. To me is everyone. but we're attracting customers in, they're not ready to buy yet.

So we just allowed them to wander out. Google are using that information to sell those customers again to you, often to your competitors. And you're, stuck in this cycle. It's not a, it's not acquisition, it's reacquisition of the same customers over and over again. Yeah. Yeah. So we started to, um, so all those things kind of came together for me a few years ago, and it started to look at it from the point of view of how do we start putting the store.

Back at the center of e-commerce and not have the store of the last bit where the transaction happens and where people price. So that's what we really dedicated ourselves to, and that means you gotta approach everything differently. So first of all, we have to learn about a customer within the first click.

Mm-hmm. Okay. So traditional ai. Yeah. Great. You know, after, after, after a while, it starts to understand a bit about customer and then it starts to get a bit better. Not good enough. Because it, it's way too late. There's no point in understanding a customer is interested in buying a lawnmower or black shoes or whatever.

Um, after they've looked at 15 of 'em, you know, it's gotta be instant. And, and the other thing we gotta do with e-commerce is once we know what they're interested in, we gotta start making it about them. So we've gotta start building, not just trying to close that sale, but, but build it like the experience you have in a store.

Okay. So, um, and that's really important. Um, I'll give you an example. One of the first, um, one of the first clients we worked with sell a lot of baby products, and they, they talk a lot about the buggy. Okay? So they kept talking about your buggies. Really important. We gotta sell the buggies. Buggy. Buggy, they're cool.

Gotta sell a buggie. It's about 1500 quids worth of, of, um, of sale. So that's pretty good. But after a while, he starts saying, guys, it's not about the buggy, it's about the baby. Like nobody wants a buggy. They want a baby. Yeah. And then when the baby comes, they have to buy a buggy. So why are you so obsessed about the buggy?

And we know it's an anchored product, but we gotta think about the fact that that anchored product is just one of the many, many things that need to be bought. So with we, when we put all that together, the whole point is understand the customer early. Understand what they're actually interested in doing so you can start to build a path for them and, and they feel that they're getting serviced.

They feel that they're getting suggestions. They stumble across stuff instead of stuff being shoved into their faces and they naturally start to buy more stuff and, and, and often buy more expensive stuff. So, so that's the whole ethos behind what we're doing. And it, it doesn't mean that we are gonna do some different stuff, you know, some of what we do.

Hasn't been seen before on e-commerce sites, but it's pretty obvious how it works once you see it. Um, but it's, it's there to try and change the experience for that customer. That was a very long answer, by the way. Yeah. For a very, but, you know,

Matt: um, tends to be the way Alan, I'm not gonna lie. Uh, but it's, I mean, I'm listening to you is fascinating cuz there's, I mean there's a lot of, um, uh, little nuggets in what you've said there, um, that I, that are sort of, they're easy to sort of slip, slip off the tongue.

Um, The sick of paying Google for my own customers, uh, I thought was an interesting statement. Um, personalization tools not working, uh, because they push product to the customer and they don't think about the customer. Yeah. Um, and then this other thing, the Buggy Baby example that you gave, I thought was really good.

So there's a few things in there. I've made notes, Alan, cuz you know, I like to make notes and. Um, I want to jump into some of these a little bit, expand on them, and I'm very curious to know what you think has to be done differently in e-commerce, which was what you said towards the end there. We have to do stuff differently.

Um, and, um, I, I'm, I'm curious to jump into that as well, if that's so, so there's a whole bunch of stuff, so your long answer is given me a whole great deal of stuff to ask you about, so that's good. Um, So let's start at the end. Um, you say you have to do things differently in e-commerce. What do you think needs to be done differently?

Alan: So the starting point is we gotta start selling through service. We got, so actually, let's take a step back. One thing I say to a lot of retailers is you, the only parts of the internet you own is your store. So it's time to own it. Really own it, yeah. Okay. So you regard, most people manage their store, like they manage a shelf.

Okay. They stack 'em high and they hope things happen and they, yes, they, they do all that other stuff, but they're not really trying to differentiate on the experience. So for me, What we do is, I mentioned that phrase at the start of we create a unique store per customer. So if you go on to one of our customers stores, after one product view, elements of the store will start to bring product towards you.

And not just on the product detail page, but everywhere through the site. So when you search for stuff, we should be referencing stuff that it's interesting for you. Again you've shown some propensity for it. When you leave and you come back tomorrow, you should be instantly start to be brought back and expanded out from where you were yesterday.

So, you know, if you look at hoodies, then there's jeans and there's shoes and there's, and, and most people think of this cross as cross sell, but actually if you do it really well and you change the experience, it feels like you're building a store for the customer in front of them instead of trying to do a hard sell on them.

Right. Um, one of the things in the very. Probably in the first few weeks of, of, of Shop Box one company. I talked to an apparel company and they talked about the shopping journey being about 30 days on average for somebody to buy an expensive dress. Mm-hmm. I mean, that's interesting. What's, what's the problem then said, the problem is we miss the first 29 days.

Cause all we're trying to do is sell the dress. So we miss, we've missed every decision point that customer made along the way. And then what we're trying to do is compete on price to get it over the line. So we gotta change that. And the way to change that is to start making everything about the customer.

I'll give you a really good, simple example of one thing we do, which is very effective. Um, and, and then I'll, I'll move on to, to, to, to something that we, we released quite recently. So even thing called a curated homepage. Every homepage apart from Amazon is a branding exercise. It's nothing to do with your customers.

I would say to every listener, go and have a quick look at Amazon. Now, the top of the Amazon screen is about Amazon's branding. The bottom is about the customer. Mm-hmm. So they're taking millions of products and they're finding 10 or 20 things that might inspire you. I'm not gonna see the vast majority of categories Amazon ever has.

Yeah, because it had interesting for me and Amazon knows that, okay? Mm-hmm. We've started to introduce that technology to pretty much any store. So with one simple change to a site, yes you keep your branding, but once I show what I'm interested in you, the rest of that page starts to become about me. Okay.

Just throw me into, into things that I haven't thought about before. Now we've started to move that whole concept on, so now we're creating what we call a personal shopping space in every store. So, okay. Every customer that comes on and, and actually, let me take a quick step back cause I, I, I've started to talk to retailers about, there's essentially three major areas.

That you're in, in e-commerce, most of us only care about two. And the third one is something that we're really introducing now. So the first one is a competitive space. When you're competing on Google, you're in a competitive space. Your job is to get them outta Google onto your store. Full stop. Yep. Okay.

The second you get 'em onto your store, everyone thinks, oh, the job's done. So the job is only started now your job is started. They don't go back. The second they hit that back button, that 5, 10, 15 quid you just spent, that's just been wasted. In fact, it's been spent to attract the customer to your competitor.

So yeah, you don't wanna do that. So our first job in in Shop Box, we have components we call the AI shop assistant. That allows you to get very deep into the store very fast. So it allows a customer to start having a guided experience from the second they land. Okay. And it's up to the customer to engage with this.

We're not trying to force the customer down a route. We're trying to make it really easy for them to explore much more deeply. Okay? Okay. Once we get that, after just a single product view, we start building a customer shopping space. So a for you place, we have customers, we have a wine store that calls it your Sommelier.

Okay. We have a store that's, I love this one cause I love bad puns. Uh, but we have a store that sells a lot of woollen products. Yeah. They call just for Ewe. E W E. Okay. Yeah. They like their puns. But the whole point is after just one product click, there's now a place in that store that belongs to me as a customer, not to the retailer anymore.

And our job is to constantly, Um, find new, interesting things for that customer all the time, and not just what they're looking at now, but here's some new stuff that you didn't think about and you haven't been back for a week. Well, we got some new stuff that is nice and shiny and new. And by the way, for the retailer I margin, uh, here's some promos that would be interesting for you.

So, you know, sale pages are just a representation of a bargain basement to a large degree. It's random product that never fits you. Yeah, well we, we change that. We say, look, you're interested in this stuff and we know your size, so let's, let's go and find you some stuff that might be interesting for you.

Mm-hmm. Okay. Just fire different neurons. Make a nice, a nice place for the customer. Now the point of that is once somebody's on that part of the site, it becomes much more difficult to go to a generic store competitor store, cuz you gotta start all over again. Yeah. There's no suggestions, no service and we're, our retailers are, are using that in their emails to try and, you know, when they make a sale.

Have a button on the email to bring somebody back into the personal shopping space so that you're trying to keep them in a place where it's all about them and yeah, they can go out into the rest of the store, but, but let's try, and every time they go out, let's make that personal space reflect that.

Matt: Okay. So I like, I like that. I like the idea of the personalized shopping space. Um, it's a bit like, um, if I can use this analogy and correct me if I've, if I've, if I've misunderstood Alan, if I'm, if I'm not getting what you're saying, but it's a bit like going into quite a, a high end department store. You can shop around the floor with everybody else, or you can have a concierge take you over to this section and they're gonna bring some tailored products just for you.

And they're gonna give you a glass of champagne while you. While they, while they wait on, you hand and foot, right?

Alan: We haven't figured out the glass of champagne, but I'm obviously making notes right now.

Matt: When you figure that out, come back on the show and tell us how the hell you did that, because that would be amazing.

Um, That's, I mean, I, I like, I like the principle, I like the philosophy of that and using your e-commerce website to create that experience. It's not just, I'm gonna throw random stuff, um, at you, but this is curated to you. We're gonna make you feel like this is unique and special. This is not what you're getting on a competitor's site.

Um, I like that. And just to backtrack a little bit, you said one of your strategies was to draw people in deep into the website. Yeah. Is. Is that how you do that with that personalized shopping experience? Or are there other strategies which you have, which draw people in deep?

Alan: Um, there's quite a few, so everything we do is about that.

It's about constantly giving people back. So typically we see people spend about five times longer in a store with shop box. Mm-hmm. Uh, and that's, that's really important for us because the uplift, the uplift is typically about three, three times increase in conversion. But that's driven by behavior change.

Okay. So I always say if you see an, if you see a commercial metric change, you gotta be able to push it. You gotta be able to figure out where it came from. So we can see that in the number of products and the time they're spending on site. But everything we do is about constantly drawing the customer deeper into the store.

You know, the same way in a physical store, that's what shop assistants do. Yeah. That's how you lay out. You use the shop assistant to guide you. That's, that's what they're there for. That's what makes your store more, you know, unique compared to the one next door. Mm-hmm. We all have the same, but the shop A makes it a different experience.

So that's a, so we're trying to do that everywhere you go on a site.

Matt: Yeah. No, it's a clever idea because, I mean, just the logic of a, a traditional store, the deeper I'm into it, the harder it is to leave. Right. Or the further I've gotta go to get out of it. So, um, yeah, you can see that the reason why you would want to do this.

Alan: Yeah. And for me, it, it's kind of a funny one, one of the things, so I I, I often talk to people about, um, what we forgot when we moved online. So we spent 150 years learning how to manage a store and we, haven't stopped learning by the way. It's changing every day. And we forgot it all when we went online.

So I'm gonna give you a couple of simple examples. And you see these retailers, you can nearly see them cry. Um, no shop assistant would come out of a stockroom without a box. Mm-hmm. Okay. They wouldn't, they wouldn't go into the stockroom a second time because they wouldn't have a job. Okay. So we never come outta the stockroom empty handed.

But we're absolutely thrilled about telling people online that we have no product. You know, we're all out of stock. Woohoo You can call it outta stock, you know? So it's, um, when did we decide that was a good idea? We decided offline it wasn't. So we need to constantly move people to what we do have, cuz that's, that's all we can help 'em with.

So, uh, and the mechanism for us was, oh, we don't have any, give us your email address. So let's create friction more and more friction. Let's not create friction, let's make it easy for somebody to move on. Okay. We also decided that it was just about the product that people only cared about price and they only cared about the product that they were already searching for.

But that's not what we do in stores. In stores we're there to inspire people. Yeah, so for me, it's. That thing of drawing people into the store. It's not about trying to, you know, kidnap them into the back of the store so they handcuff them and gag them. I'll come back to the glass of champagne that, that takes the edge off that one.

Shopping's fun. Yeah. You know, most of the stuff, most of us have, we don't need. It's fun. It's, it's, it's, it's stuff we want and it's, it's, it's. We, and we always want a better product. What we discovered, um, very early in the days shop box is if you suggest stuff in an intelligent way that feels like service, people will tend to buy a better version of what they're looking at.

Yeah. Generally don't buy what they comfort. They ne normally go, uh, an extra 10 pounds. An extra $10. Yeah. Why not? It's a nicer product. Yeah. I, I saw a great quote recently, uh, can't remember who was from, but said, you know, you'll remember the value of the product a lot longer after you, after you, way after you've forgotten the price.

Yeah. And I think that's what retail really is, is, is, is to build up and. And that's why I think we forgot that when we moved online, we said it's just about having the product and making it easy to find and then they'll figure it out themselves. That's not the way retail works. It shouldn't be. Yeah. So the, well, there's some of the things, there's a lot more things that, that we've kind of forgotten online.

But, uh, there's some of the things.

Matt: I, I think it's a really interesting and insightful conversation, just getting back to, to basics in a lot of ways. Um, Alan, um, I'm curious by this statement that you mentioned about the, the dress shop that said there was a 30 day transactional period. Yeah. And they missed the first 29 days.

You know, they missed that. That sort of, um, process in the customer, which I think is a really powerful, um, it's really powerful pictorially to think about that, isn't it? That you know that your customer comes, they're gonna go away during that time. They're away, they're gonna make some decisions. And if you are not there, present with them, um, it's, it's harder to remember who you are, I suppose, unless you are, you know, a specific, like a Tesla, you have to go back to Tesla.

But, um, What are some of the strategies then that you've seen work well, um, through Shop Box, through your experience in e-commerce, through use of technology, um, just going into a store which helps you get into those 29 days.

Alan: So I think the first thing is you've gotta figure out, and this is the first thing we did, was how do you figure out how to help the customer find.

Interesting stuff quickly. Okay. So the very first thing we, uh, um, went live with whatever three years ago was thing we call the AI shop assistant. Mm-hmm. And we don't call it that in the store. In the store, you brand it yourself, but the whole point is that you can shop by example. So you see something you like and you can say, I, I like that.

And without it trying to take you to a different part of the store. You start to see a lot more product that's interesting for you. Mm-hmm. Now there's a lot of subtlety goes on here, and this is where I think e-commerce is, uh, uh, is too transactional. Uh, we're all used to looking at one product and it follows around the internet for two year.

Two weeks. Mm-hmm. Yeah. I personally believe most, most shoppers are quite intelligent. They can figure out product themselves, okay? Mm-hmm. Our job is to help. Okay? So my job is not to find the perfect product and to force it down their throats. My job is to make it an experience where they'll naturally find the products that are interesting for them.

Yeah. By me curating. So you, you mentioned the word curation earlier on. Curating is not about finding the perfect product, it's about having a nice selection that, that. That has, we call it, um, variety with context. Yeah. So you have the context of the customer, well, let's show 'em some variety. Give them, give 'em some space to work in.

Okay. So I think opening it up and allowing people to explore, but without throwing random stuff at them. Mm-hmm. And by the way, I've seen, I've seen random sites. We had one site where you looked at a pair of work boots and you saw, I think it was a coffee machine beside them. And, and I was looking going.

What's that? What, like I know that people work and drink coffee, but that's the only relationship I can see between those two products. And, and you see that everywhere. Yeah. But, um, so I think that variety with context concept is really important. The other thing we do is, I, I don't like the phrase cross sell.

Because it feels like I'm, you know, I'm running a, a, a customer through a filter. Yeah. It's time for me to cross you now. Yeah. So, so we try to be quite fuzzy. So when we, when when somebody shows interest, I don't see that we should try and force that sale and then add stuff on. Now we can do that.

You know, it's always good to add stuff on at the right moment, but right up front you say, look, you're interested in a floral dress, by the way, here's a straw hat. Mm-hmm. Because there's a whole look going on there, but, but we leave that way too late. We, we leave it to the person's nearly bought bought and we said, let's try and add all this stuff on, start to show that stuff much, much earlier.

So yeah, we are in very, very different parts of the site to where you nor traditionally see personalization, but we'll also used very different mechanisms and we're much fuzzier because it's much more about trying to get the context of the customer. And much less about let's try and close the sale. But naturally the sale will close.

The, the thing is, if you give people space and give them service, they will buy more stuff. And, and that's how stores work. That's how physical stores work.

Matt: So, uh, I like that. Get the context, uh, context of the customer before trying to close the sale. Um, that's actually quite a great phrase, isn't it?

Um, trying to understand your customer before you try and close the sale. Yeah. So that's where, um, me as an e-commerce entrepreneur, I'm sitting there thinking, well, I like that in theory, in reality. How the hell do I do that? Right? Because, um, it's, it sounds ideal. And I suppose that's where AI is, is and technology is becoming more and more accessible for me as a small time retailer versus people like Amazon that have, you know, got thousands of coders figuring this out.

Um, So I, I get that. I, I get that technology is, is now, it's now possible to start using technology to help me do this. You just have to think, I think slightly differently in how you, in how you set up your store, don't you? And how you, how you go about it.

Alan: Yeah. Yeah. So I guess, sorry, go ahead there Matt.

Matt: I was gonna say, I guess one question I had though Alan listening to you talk is the, um, curate variety idea. Um, How does that work if I have a site that only has half a dozen products or a dozen products and I'm not, I'm not Amazon with a thousand products, Do you know what I mean? I have 12 types of sun cream, or I have 20 types of T-shirt and that's it. You know?

Alan: Yeah. So I would say that we are not a good fit for that. Really straightforward with you. Generally, we tend to add value when there's about 300 SKUs operates. Right. There's no upper limit, but you generally want about 300. So we have a couple of clients who are less than 300, um, and that works well cuz there's variety within that. So we'd always take a cold hard look.

And I, I've turned up for customer meetings where I said, look, I, I don't think we're a good fit. I'm quite happy to explain to you what we do because some of what I do, some of what we think might be useful to you. So I'm quite happy to have a conversation with a retailer because the odd one turns around and says, actually, There's other things happening in our store that means people can't find product.

Okay. Yeah. You're, you're selling 12 varieties of sunscreen. The chances are that somebody has arrived to buy those. Yeah, there's, there's limited opportunity for curation cuz it's kind of happened before they've arrived. But for most retailers, that's not the case. For most retailers they've enough product and they have enough.

Um, They, they, they've enough scope to add to the product catalog. They're constantly adding new products. There's new seasons, yada yada, that, um, they need to manage that. Without curation, customers are, are never gonna find the pr, all the products. We have customers where if you look at their, um, when we went on about 10% of the product catalog is driving most of the sales.

Okay. And that's not a great place to be. No. One, one of the things we talk about a lot is, um, let's say, let's say the, the bias word, okay. Bias is really important in ai. Mm-hmm. Um, And, and people need to understand what it is. So typically when, when we say the word bias, people think about race or gender, whatever, because models have been trained and they haven't taken account of the full population, yada yada.

Yeah. That, that, that's not good. But bias within what we do actually has a commercial, a negative commercial impact if it's not managed properly. Mm-hmm. Okay. So what happens in most retailers is when they apply AI, the people who are doing it don't actually understand retail. So what they do is they do a and we all know it, people who like this also like this.

Yeah. Great. That drives the average customer to the best seller products. So your, your catalog is gradually shrinking and shrinking and shrinking. Yeah. And you think you're doing really well because people are claiming sales, but actually you're killing your business. You're killing your margins. You're creating what we call the long tail problem.

Okay? We've, we recognized that and one of the things we wanted to do in shop Box was say, actually AI needs to serve retail, not the other way around. So we built something that from the ground up, understands product, even within seconds of it landing on the catalog. So typically about five seconds after something hits the catalog, we find customers for it.

Right. What that means is long tail product starts moving, so you don't have to start discounting everything three weeks after you put it on the catalog because it ain't selling. Yeah. Okay. So it's, and, and because we're at a customer level, you know, even if you put a thousand new products on the catalog, we don't have to choose which three are we gonna show today.

We're choosing at a customer level. So all of those are getting airtime if they're relevant to your customers. Mm-hmm. Okay. So now the way to, the way we do that, Um, one of the biggest problems in AI traditionally has been the barriers to entry. So I don't understand it. I don't have the people who have the skills.

They're expensive. I don't even know who I need to employ. The whole thing. Okay. And when I do employ 'em, I find out they don't know anything about retail. So actually they end up, their AI models end up competing against my retailers to a large, yeah, my merchandisers. So we just said, look, this needs to, we need to create something that is.

Uh, simple to connect. So typically we're live with a customer either a day from anywhere from a day to three weeks after they sign a contract. Depending on you, you three weeks is UD where they have a completely bespoke platform and, uh, yeah, need to understand a bit more still, but it's still very little work for the retailer.

Um, and the heavy lifting is done by the AI in the background. Which understands fundamentally product and how retail works and what we're trying to achieve. So you can point it at the problem you're trying to solve. Mm-hmm. Okay. So if you wanna drive higher margins, you can, you can do that. You can allow it to, to focus on that.

If you need to move a lot of stock that. Uh, you've overstocked on, that's fine. Like don't override the thing to the point that you're actually forcing product on customer, but give it parameters to allow it to help your merchandisers rather than just find product for customers. Yeah. So we we're trying to balance the customer and the merchandiser, uh, uh, um, all the time cuz that's, that's what you need to do and reach, make profit.

Matt: It is. Now, if you are, I, I like if you're using technology to do that in a bespoke way for each visitor to your website because everybody's different, right? And so you can understand that. So, yeah, so, so if I've got 12 products, um, this kind of, uh, ideology for want of better expression is not gonna work well for me.

Cuz like you say, they're in a, you know, my customers, maybe you're in a different phase of, uh, phase of curation. But let me then say, right, well I've got a site of over and there's two sites I'm thinking of in my head as I'm talking, Alan. Right. Um, I used to own, uh, we sold it a couple years ago, but we owned a beauty site, had four or 500 SKUs.

Yeah. And, um, on that, what we found was, Um, customers typically once they'd found a brand, became very brand loyal. So if someone was using a, a certain brand moisturizer, it didn't really matter what I did, they were staying with that brand moisturizer. The only way I could really get them to try another one was to send them a free sample.

Yeah. Um, and even then, whether they would buy it would be different because the free sample has probably not got enough product in for them to, to see, you know, over a space for a week or two how it's gonna be. So how do you, how do you combat something like that? I thought that would be an interesting question, and then I'll get onto my second site.

Alan: Okay. So let's, let's talk about that. So why do you wanna combat it? Is the first question. So if somebody likes a particular brand, help them. Mm-hmm. You know, at the end of the day they like the brand for very good reasons normally. And so, uh, I'll give you an example. Health and beauty. So we do a lot of work in pharmacy, which is essentially health and beauty to a large degree cuz we're not on the prescription side.

Um, so, but what we find is you look at something like L'Oreal, they might have 80 skews from L'Oreal. Three of 'em have been seen by their customers. Yeah. So, So you, you've got this problem. The long tail problem is not that the brand isn't being seen, it's that skews within the brand aren't being seen. So the person's coming on and they're looking at particular things from a brand, but they're not considering the brand for other things.

Mm-hmm. That's a huge problem. So you still have a long tail problem, it's just all they're doing is replenishing and they're not extending. Um, so. If we know that somebody likes a particular beauty brand and they looked at moisturizers today, then we can show them what they've been looking at. But we can also show them, well, this is the, the one from your, the brand you like as well.

So we're reinforcing a behavior that is good for them and good for you. Yeah. And so it's not about trying to a, again, it's trying to move away from that push product into try and be relevant and they'll naturally pull the product to themselves. But you gotta be, but you have to be relevant at the end of the day.

Um, I'll give you a really good example of some bad stuff we've seen, like I've seen. A three Euro moisturizer beside a 30 Euro moisturizer, and there is nobody else in planet who wants that experience. Yeah, okay. If I want expensive stuff, I do not want to see the cheap version in front of me. Okay. I don't need to control that.

So it's not, you know, a lot of people say, oh, it's all about, it's never about price. It's never ever about price. Um, the, there's, there's always give with customer, there's loads of other reasons that they buy products. Yeah. And as a retailer, if we merchandise well, We, we, we keep them, we keep them in the right, uh, in the right section of the, of the catalog for them.

Yeah. Um, yeah, so I would say listen to customers loads of, I I used to draw a diagram many years ago and we used to do a lot of face-to-face meetings. We'll say, you know, 50% of your customers aren't, aren't here to buy at the moment. They're here to explore. Mm-hmm. Help 'em, 50% are ready to buy right now, so help those in a different way.

And, and, and that's why. We are doing different things in different parts of the site because you tend to find that people who are exploring spend a lot of time in PLPs and in homepages, and people are ready to buy, start going into PDPs more aggressively and yada yada. So, um, the, the, that's why there's different treatments for different people in different places.

Matt: Wow. The very good, it's very good answer. Uh, and again, bringing all of this back, listening to the stuff that you're talking about, um, Is, uh, I'm just flipping back in my notes, um, was this idea of the buggy and the baby. Um, and it seems that this concept seems to, uh, underline everything. So let's just, let's talk about the buggy and the baby.

So, th this company comes along. They, they've got this high end buggy, which they sell, they sell it. A lot of it's their flagship product. Yeah. How does that mental shift change their website when they stop thinking just about the buggy and move to the baby?

Alan: So the point of what we do is that they don't have to change the website, that we add elements and we make changes automatically that reflect that. So you take a standard site, whether it's Shopify or Magenta, or big Commerce or a bespoke one, they've written themselves, especially for some of the largest ones, larger ones, that doesn't matter. You still manage your website exactly the same way. What we do is we put elements on top that make it much, much easier for people to find products.

So if we take that curated homepage, you might have your branding at the top of page. We say, well put one line of code in, and now halfway down the page, they're already starting to see curated products for them. So they don't need to make changes. They need to just put in one line changes elements. That we can then hook onto and make suggestions to customers at the right place, A and, and draw.

And they can manage everything then on a backend. So we say to our retailers, you, you change nothing. You add no data, you add no metatags. The whole point of AI is that it doesn't need a. Metatags and all that sort of stuff. Um, they're a huge issue for most retailers to have to maintain all that. Mm-hmm.

Um, so for our retailers to say, there's enough information being added by your merchandisers, that we know what to do with your products. And, uh, interestingly, I remember the first time we did a wine store. I didn't, I I really did not think it would work for wine. Okay. I thought we're gonna be in electronics.

It'll be apparel, it'll be department stores, but wine store came along. They were at an event. They loved what we were doing. They said, I'm not sure, but go for it. Like, look, we'll, we, we can get it running for you, but we, you may not wanna go ahead, so we'll be nice to you about the contract. And uh, when they saw it, they said, this is the kind of stuff we would do in store.

Yeah, let's go live. So that was, they're, they're now have a My Sommelier page, which I love the, the idea of that. But, um, but, but that's the point of the AI is the AI is there to figure all that out. I, I, I, um, I kind of, you know, I, I say to people, I've been in AI for 26 years, so five years ago none of you had heard of it. Then you didn't know what it was.

Now you all wanna do it. So the job is not whether it's important. The job is to explain what the, the, the real thing from the BS that comes along. Yeah. And say, You can do an AI vendor and they say all you have to do is go, oh, so you have to do work. So sorry, what part of automation requires more work?

Yeah. Um, the whole point of AI is that it can take the intelligent stuff your customers do, the intelligent stuff your buyers and your merchandisers do, and turn that into a dynamic store for your customers. That's the whole point of it. Yeah.

Matt: Yeah. So something that makes Yeah, yeah, yeah. Uh, so I like your 10 years ago, no one had heard of it Five years ago, everyone was questioning it.

Now everyone wants to use it. Except for, uh, I saw in the press that, um, the, the government is now like, how do we control this? Yeah, exactly. Uh, which is, which is quite fascinating, isn't it? And um, and it's, it's interesting, uh, Alan, and maybe I'd love your opinion on this because. As things stand as the, at the moment, I get a lot of inquiries from people wanting to come on the show, um, to talk about something to do with AI.

Um, or we, I, as an e-commerce entrepreneur, I get a lot of people saying, um, You know, sending me an email saying, this tool, uh, this AI tool will revolutionize revolutionize life. So everybody at the moment, every tech developer I know seems to be throwing the word AI into the product title to try and convince you this is a good thing and it's gonna, it's gonna change the world.

But most of the time I can't help but think it's not actually AI, it's just a bit of baloney from our sales. A marketing person, it's a, it's

Alan: either a bit of baloney or it's a bit of it's, I love when people say to me, oh, you know, what's the algorithm? I go, that, that doesn't even make sense as a question.

Um, you know, it's the whole point is this is a systematic approach. To using information to help customers. Okay. So we have, we have algorithms that are just there to figure out where people are in the buying cycle, to figure out price elasticity. We have algorithms that are there to figure out how brands fit together.

So you mentioned earlier on about brand we've won luxury, uh, retailer, I, I love this. Uh, say they, they sell secondhand handbags, secondhand handbags for 20 grand. Like, you know, so handbag secondhand, but it's a really interesting problem because they've only got one of each. Mm-hmm. So these are real collectors and it's a fantastic business.

But, um, they, they said to us, and then we ended up with, uh, uh, uh, creating algorithms specifically for this. They said actually brands don't work quite the way they do in other, other areas because somebody who likes Prada will also consider Gucci, but they won't consider a Hermes. So there's, there's clusters of brands that work together and it's different for different parts of the product catalog and yada yada.

So, um, so we drove algorithms to figure out where, how, how far you could stretch a brand and, and which brands went together and stuff like that. So there's layers and layers and layers of stuff going on. And I think when people say machine learning to me, that to me is a bit of a red flag. Mm-hmm. Cause it, it's too low level if people can't.

Articulate how it can work fully, automatically. How, why, um, what the retail problems are. So if the retail, the only retail problem they can talk about is we can increase conversions then, to be honest on call 'em bs. If you can't understand how we can help a merchandiser, it's not all about customer. If it's all about customer, you'll end up selling.

10% of your product catalog. Yeah. If they don't, if your AI system doesn't understand merchandisers, if you can't ask, answer basic questions around that, you got a serious problem. Um, and, and I would move on fairly quickly. Um, but Rule of thumb, 90% of them are probably not ai. Uh, but you know, they got marketers.

So, uh, it's, it's actually quite funny, Matt, because about a year ago we were having a big debate whether we dropped the AI part of our, our, our company name as our trading name. And, and I came down on the side and said, look, I don't think AI is really doing, like, you know, do we really need AI at the end?

I think I've gone back on that again.

Matt: It's an interesting one, isn't it? Because it, it, it is one of these buzzwords at the moment. I remember when we, um, when we started the beauty companies going back to 2006. So, yeah. Um, you know, you, you were what, nine years into AI at this point? And I was starting, um, a beauty website.

I. And the beauty website, Origin, I mean it, it didn't stay in Jersey, but it started in Jersey. And for those of you outside the uk, jersey is a small island off the north coast of France, which is kind of independently British and had a really quirky set of tax laws at the time, which meant you could sell product to the UK under a certain value without sales tax or VAT.

Um, and so we just happened to start this business up, you know, this beauty company, and we thought long, you know, what do we call this business? What do we call, um, Jersey was a buzzword at the time. And so it, it, it was one of these words which meant both luxury and cheap all at the same time because you felt like you were getting luxury but without tax.

You know, it was kind of like an, an illegal sort of tax, uh, illegal tax, tax loop. And we deliberately used the word jersey. Uh, in the title Jersey Beauty Company, um, because of that very reason, right? That it, it, it, and it, and it had a certain kudos. I don't think it has that anymore. Ju, I mean, Jersey is still a beautiful place, but it doesn't get the, the tax breaks.

And so we still associate luxury with Jersey. Um, and so I just think it's a really interesting thing, isn't it, that now everybody is using the, the buzz term ai people on the whole, it seems, don't really know what it means. Um, and it's. It's being sold as the golden chalice, isn't it? The, the, the sort of the, the silver bullet that's gonna solve every single problem for you.

You're gonna become a millionaire overnight and you don't have to do a single thing kind of a thing. And actually that's not the truth. Um, and so, um, which is why we don't talk to 90% of the people that want to talk to us about AI in the podcast cuz you're like, this is just nonsense. Oh, it's very true. Just nonsense. And you, you're like, Ugh.

Alan: There's a couple interesting things on that. Like think my job is to help retailers, retail. That's it. Mm-hmm. And they can't be there in front of the customer online. So our job is to do that for them. So we're just one element. We're, we're the shop assistant. We're there to guide and to help and to make people, inspire people and, and make it fun.

That's our job. Yeah. Um, the. I was in a room last week and people were talking about chat gpt, complete aside. We don't, we're not, you know, chat GPT is fine, but it's a different type of ai. But, uh, a guy turned around, he said, you know, I got it to set up a store for me and it did this and it did that. And this is a load of digital agencies and they're all worried about chat gtp.

And, uh, he said, and, and, and then three months later I'd made 50 pounds. And, but it was all automatic and everyone went, oh, oh God, that's quite scary. I went, that's really scary. You made 50 quit. What was the point of that?

Matt: Yeah, yeah. So scary how little he made maybe.

Alan: So I think it's very easy to say, oh, it's all magic. And I, and by the way, it is magic. Like when I look at what we do and I see some sites go, holy god, this is amazing stuff. But underneath the covers, it's not really magic, the um, but it still looks amazing. So that's fantastic. Yeah. And it can do amazing things, but you gotta put it in a business context. Without the business context is just, it's just a machine that's going to go to the average very fast. That's all it's gonna do.

Matt: Yeah. Yeah. Well, listen, Alan, I feel like we're just starting to tap the surface of this, uh, quite deep, wide topic. Um, and, uh, I'm aware of time, so. Uh, shop box, uh, dot ai is your url. Did I understand correctly this is something that you can plug into your existing website or is this something that is a standalone platform?

Alan: Yeah, exactly. No, this is your existing site, so you make no changes to your existing site. We've had customers up and running the next day after they've signed, uh, but typically it's a week to two weeks, um, before we go live. And that's mainly the training of the ai. That's all on us. Um, so for a customer, it's very, very simple and it starts working straight away.

So, uh, that's really important for us, and we don't really, we're, we're not, we're pretty agnostic of, of, of platforms, so I don't think we've come across anyone that we can't implement on.

Matt: Fantastic. And if people wanna find out more about Shop Box or want connect with you, what's the best way to do that?

Alan: So, website, shopbox.ai. And uh, just click on a, uh, um, a sales thing and it will come straight through to me. If you mention the podcast, uh, e-commerce podcast, then uh, I'll make sure it comes straight through to me. Um, also my LinkedIn, so Alan Gormley, g o r m l e y, at, um, and Shop Box is the name of the company. Uh, ping me on LinkedIn. I'll send you my email address and we can connect and it will be great to talk.

Matt: Fantastic. We will of course, link to all of that, uh, information in the show notes, which is great. So Alan, let me just close with my final question, which I've started to ask people just because you know I can, so I said at the start, um, I was trying to think of a really great reason, but I just No, I just, cuz I can, that's, I suppose that's good enough.

It's my show. Uh, this, as I said at the start, this show is sponsored by the e-commerce cohort, which helps e-commerce businesses deliver e-commerce Wow. To their customers through coaching and training and the monthly mastermind. So I wanna imagine, Alan, listen, uh, let's pretend it's not digital. We're in a room, a real room full of all cohorters.

Yep. Uh, and you've just delivered a keynote, um, on, you know, winning the e-commerce game with ai and everyone's going wild. Great. Go, Alan. Best speech ever. And you stand up at the end and say, listen, I, it wouldn't be possible without dot, dot, dot. So you've got an opportunity to thank those who you have, uh, who have influenced your own journey past or present, who would you thank and why?

Alan: Oh, God, that's a, that's a difficult question. So here's the thing. This is the first company I've set up. We're three years into the journey. I've talked to about 5,000 people. Wow. And I don't think there's one person that I haven't gained an insight from, including this morning.

I was on a two hour mentor session this morning and I just don't stop because everyone from investors to potential investors to retailers who just wanna see you succeed. It's amazing when you set up a, a company and you're doing something interesting, people want you to succeed and they're prepared to help.

Yeah. I had one random CEO I pinged him on a Friday morning and said, look, I'm, I'm free at, at five o'clock. He had rang his wife at seven o'clock saying, listen, I'm gonna be another hour. I'm talking to this guy. He gave me three hours one night on a Friday night. Wow. Wow. Just to help us think through our go to market strategy.

So I couldn't point to one person. There's so many. Um, and obviously these are the usual, you know, people who help you set up and all that, but really it's amazing when you start a company that's doing something interesting. People just flock towards you and wanna

Matt: help. Fantastic. Well, that's, that's a very good answer and very true actually.

Yeah, very true. Yeah. Uh, so many people Listen, Alan, thank you so much for joining us today, man. Super enjoyed the conversation. Um, and, uh, you've got my brain, I've got pages of notes again, as I always do, and few conversations down, just some of, even though I maybe on my site shop box might not work as a concept.

Some of the principles you've talked about are timeless, and I think that that's, That's a beautiful thing in all of this. So thank you so much for sharing your wisdom, bud. Super appreciate it and thanks for coming on the show,

Alan: Matt. I loved it. Really enjoyed it. Thank you very much for the opportunity.

Matt: No. Great. Great. Well, there you have it. What's a fantastic conversation. Huge thanks again to Alan for joining me today and also a big shout out to today's show sponsor, uh, the e-commerce cohort. Remember to check them out if, if you are an e-commercer, do go have a look at the website. Just check it out, ecommercecohort.com.

See if it's a good fit for you. I think it will be, but do check it out. And be sure to follow the e-Commerce podcast wherever you get your podcast from because we've got yet more great conversations lined up, and I don't want you to miss any of them. Oh no, not at all. And in case no one has told you yet today, dear listener, you are awesome.

Yes you are. It's just a burden you have to bear. I have to bear it. Alan has to bear it. And you've gotta bear it as well. Created awesome. Now, the e-Commerce podcast is produced by Aurion Media. You can find our entire archive of episodes on your favorite podcast app. The team that makes this show possible is Sadaf Beynon, Estella Robin and Tanya Hutsuliak.

Our theme song was written by Josh Edmundson, and as I mentioned, if you would like to read the transcript or show notes, head over to the website, ecommercepodcast.net. They are there for free. You can just find them on the website. It's super easy. But while you are there, make sure you sign up for the newsletter if you haven't done so already.

Now that's it from me. That's it from Alan. Thank you so much for joining us. Have a fantastic week wherever you are in the world. I'll see you next time. Bye for now.